Retail inflation in October touches 6.21%, crosses RBI tolerance ceiling of 6%

India's retail inflation rate increased to 6.21% annually in October, up from 5.49% the previous month, driven primarily by high food prices during the festive season. This was the first time since August 2023 that inflation exceeded the Reserve Bank of India (RBI)'s tolerance threshold of 6%. In September, inflation exceeded the RBI's medium-term target of 4% for the first time since July, reaching 5.49%.

Food inflation rose to 9.69% in October, up from 9.24% in September. Rural inflation also increased to 6.68%, compared to 5.87% in September, while urban inflation went up to 5.62% from 5.05% the month before. 

Inflation figures were recorded at 6.68% for rural areas and 5.62% for urban areas. Food inflation stood at 10.69% in rural areas and 11.09% in urban areas.

The spike in food prices was mainly due to the increase in the costs of essential items like vegetables, fruits, and oils. Notably, tomatoes, onions, and potatoes maintained high prices throughout the month. Conversely, there were significant decreases in inflation for pulses, eggs, sugar, and spices.

The sharp rise in onion prices during October has been concerning. Wholesale onion prices have surged from Rs 40-60 per kilogram to Rs 70-80 per kilogram.

In September, India's retail inflation rose to 5.49%, up from 3.65% in August, mainly driven by increased food prices. The last time inflation exceeded the Reserve Bank of India's upper threshold of 6% was in August 2023.

In September and October, there has been a resurgence in food prices, mainly driven by vegetables and edible oils. Moving forward, the focus will be on the Kharif harvest season, with careful monitoring of rabi sowing progress.

The housing inflation rate in urban areas increased slightly from 2.72% in September to 2.81% in October. Additionally, the All India Electricity Index saw a slight uptick in inflation, rising from 5.39% in September to 5.45% in October.